Thursday, January 18, 2007

Physical Assets


Someone calling herself J. Goodrich argues that providing student loans is an appropriate function of government:

Financial markets are incomplete in the sense that a student cannot acquire a loan against the collateral of future earning power (except with the help of the government and the rules and regulations to ensure such help).
Atrios elaborates:
As we lack indentured servitude (a good thing), and there's no physical asset associated with education (a mortgage lender can take your house if you default, a student loan broker can't appropriate your brain), student loans aren't backed by anything.
Both writers are too quick to see this as a market failure, mainly because they’ve failed to reckon with the worldchanging power of the entrepreneurial spirit:
Police in southern India are investigating reports that poverty-stricken survivors of the Indian Ocean tsunami sold their kidneys because of the slow pace of rehabilitation after the disaster. Up to 150 people, mainly women around the coastal city of Chennai, in Tamil Nadu, are believed to have sold their organs for 50,000 rupees (£575) in the past few months.
Why shouldn’t this visionary form of bootstrapping be encouraged here, as a way for low-income students to collateralize their loans? While it’s true that having only one kidney can eventually lead to health problems, it’s also true that the formalized use of organs as collateral would assure successful graduates of getting a healthy replacement organ from new loan applicants. This would give students a tangible, real-world stake in their education, and help them to stay on track while pursuing an MBA in international business from Thunderbird.

Some doctors have already called for deregulation of kidney sales. If that happens, the kidney trade in Tamil Nadu could provide yet another example of how business opportunities in “first-plus-third" economies are leading to an exciting new era of decentralized global innovation.

5 comments:

carole said...

If kidneys are only fetching ~$2000, then organ collateral isn't going to go very far with most U.S. student loan debt. Maybe the uterus market will heat up, now? Yeah, that's the ticket!
c

¡El Gato Negro! said...

Why shouldn’t this visionary form of bootstrapping be encouraged here, as a way for low-income students to collateralize their loans? While it’s true that having only one kidney can eventually lead to health problems, it’s also true that the formalized use of organs as collateral would assure successful graduates of getting a healthy replacement organ from new loan applicants. This would give students a tangible, real-world stake in their education, and help them to stay on track while pursuing an MBA in international business from Thunderbird.



¡Mee-ouch! said Jonathan's cat, swiftly.

so.

juniper pearl said...

if someone would step up and finally perfect the art of suspended animation, students could put their own organs in hock, to be reclaimed upon successful repayment of their debt. even if they default, they'll have the comfort of knowing that organ went to someone else in need. that way everyone would win. of course, there's every chance that they'd be out the hospital fees . . . "pawned kidney" would probably qualify as a preexisting condition with an hmo. but if it were a government-managed system, i'm sure they could work in some kind of loophole. after all, we need to give our best and brightest some incentive to stay in the game.

dan mcenroe said...

Why shouldn’t this visionary form of bootstrapping be encouraged here, as a way for low-income students to collateralize their loans?

you keep that up and glenn reynolds will link - approvingly - to you.

don't say i didn't warn you.

eben_cole said...

This is a really well put together page.